The Stocks the Funds Are Buying

We all know who's on Wall Street's Wish List. What I want to know -- and I'm guessing you do, too -- is who's doing the wishing. Which funds are buying the week's top stocks in our Motley Fool CAPS investor-intelligence database?

Here's our latest group of contenders:

Company

Currently Fetching

CAPS Rating (out of 5)

AZZ Incorporated

$35.70

****

Huntsman

$25.56

***

Gemstar-TV Guide

$6.29

**

Sonesta International Hotels

$48.35

*

First Indiana

$31.36

*

Research In Motion

$225.36

*

Sources: Motley Fool CAPS, Yahoo! Finance.

List-topper AZZ, an electrical components supplier, has an impressive fund following, including:

  • Bridgeway Ultra-Small Company Market (BRSIX), whose top manager, John Montgomery, could be the next Peter Lynch.
  • Tamarack Micro Cap Value (TMVSX), which is losing to the market thus far in 2007. If that holds up, it would be the first losing year for the firm since before 2003.
  • Nicholas-Applegate US Micro Cap I (NAMCX), which is making its third appearance in these digital pages. Obviously, lead manager John McCraw is doing something right.
  • Navellier Fundamental (NFMAX), a relatively new no-load fund that's pummeling the S&P 500 by more than -- get this -- 14 percentage points.
  • Vanguard Explorer (VEXPX), an incredibly cheap fund that sports a 0.46% expense ratio and a decade of beating the S&P 500 by more than 3 percentage points a year. Too bad it's closed to new investors.

Of these funds, it's Vanguard Explorer that interests me most. Here are its top five stock positions:

Company

Currently Fetching

CAPS Rating

Alliance Data Systems (NYSE:ADS)

$76.16

*****

Akamai Technologies (NASDAQ:AKAM)

$37.63

***

O'Reilly Automotive (NASDAQ:ORLY)

$33.66

****

American Eagle Outfitters (NYSE:AEO)

$25.93

****

Dun & Bradstreet (NYSE:DNB)

$99.95

*****

Sources: Morningstar, Motley Fool CAPS.

This strikes me as a high-quality portfolio. Consider American Eagle, a Motley Fool Stock Advisor pick that took flight earlier this month after reporting stellar sales growth. Here's how CAPS All-Star NuttyGambler explains the thesis:

[American Eagle] is solid, has the teen market, and their rewards program and mailings are top notch. If this is not over 33 by year-end '07 I'll eat my shorts.

Compelling, if a little spooky. (Please, NuttyGambler, don't eat your shorts.) But I'd agree that the stock has been undervalued for too long. A 0.92 PEG ratio suggests the same.

For me, it often helps to see what superior stock pickers are buying. If that describes you, too, then consider Champion Funds. Shannon's picks are up 14% on their respective benchmarks as I write. Check out the entire portfolio with a free, no-risk trial.

That's all for now. See you back here next week, when we once again look at the funds behind the fantasy.

Still hungry for stock ideas? Stop by CAPS and get your fill, 100% free.

American Eagle is a Stock Advisor recommendation. Akamai is a Rule Breakers pick. Vanguard Explorer is a Champion Funds recommendation.

Fool contributor Tim Beyers, who is ranked 3,545 out of more than 60,000 participants in CAPS, owned shares of Akamai at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy has recurring fantasies about a desert island, margaritas, and a plate of burritos. Go figure.


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